Transnet declares force majeure at ports over strike

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South Africa's logistics utility Transnet declared force majeure at its ports on Thursday, according to a document seen by Reuters, as workers began an open-ended strike over wages.

Transnet operates South Africa's freight rail network and all the country's ports. It said the strike action would have a profound impact on economic activity across all sectors, and it urged workers to consider the long-term consequences of the strike on themselves and the economy as a whole.

"This serves as a formal declaration by Transnet Port Terminals... of the occurrence of an event of force majeure to all our customers following the strike action declared by the two recognised unions within Transnet," read a letter dated October 6 and signed by the port subsidiary's chief executive, Jabu Mdaki.

Speaking at a mining conference in Johannesburg Transnet's group chief executive Portia Derby said "what we are hoping is that we will be able to reach an agreement sooner rather than later, without us having to buckle."

Thermal coal producer Thungela Resources on Thursday said an extended strike at Transnet would impact its production and exports.

State-owned Transnet was already operating below capacity because of a shortage of locomotives, poor maintenance, vandalism and theft of its infrastructure, which has cost miners billions of rand in potential revenue because of throttled mineral shipments.

The United National Transport Union (UNTU) and the South African Transport and Allied Workers' Union (SATAWU), which together represent most Transnet workers, this week turned down Transnet's offer of a wage rise of 3%-4%, saying it was below South Africa's annual inflation rate, which was 7.6% in August.

UNTU members began a strike on Thursday and SATAWU said it will join in the strike from Monday.

Transnet has said the strike was illegal and that unions had not followed rules set down in the labour law.

It questioned the balloting processes used to approve the strike action and said no picketing rules had been agreed by the company and striking workers, as required by labour law.

Both unions rejected Transnet's charges, saying they had given the required 48-hour strike notice.

UNTU general secretary Cobus van Vuuren accused Transnet of seeking to intimidate workers by declaring the strike illegal.

All parties have agreed to mediation by the Commission for Conciliation, Mediation and Arbitration (CCMA), a state agency. The unions have said further talks, due to start on October 12, will not affect strike plans.

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